Industry Analytics FAQ

Why are you publishing this?

It’s important for regulatory compliance and business planning to provide appraisers, lenders, AMCs, Realtors, and regulators with objective data on what constitutes a ‘customary’ fee charged by a local independent fee appraiser when engaged directly by a client. This national Appraisal Fee Reference™ is the authoritative guide to average and median appraisal fees and is just one of the monthly data sets published as part of our Appraisal Industry Analytics™ practice.

Is this copyrighted information?

Yes. You can’t republish this, in whole or in part, nor create a derivative work. We encourage you to discuss it publicly in a “fair use” context, but if you want to use it more broadly than that, we can license it to you.

How do you compile the fees and statistics?

We analyze hundreds of thousands of verified, non-AMC, URAR-only, address-validated appraisal transactions which utilized our Mercury Network backbone over the past 12 months. Since we operate a highly structured network, we know the details of the transactions. This is real observed data; it is not the result of an “industry survey” asking about perceived fees.

Why use “median” fees? Why not average?

It is easy for an average, or “mean”, of any data set to be easily skewed by a few high or low data points. Median represents the middle of the range, and in our experience with this fee data, it more accurately represents what would be considered “customary” in a given county. Average fees are reported for summaries, as they’re still useful, especially in conjunction with the standard deviation.

What is “Relative Standard Deviation (CV)”?

In general, the standard deviation tells you how widely dispersed the data is on either side of the average. However, since the averages for different data sets are all different as well, it’s impossible to compare one standard deviation to another since the scales would be different. (Two standard deviations of $100 mean nothing compared to each other if one is on a data set with a $400 average and the other on a data set with a $500 average.) By dividing the standard deviation by the average, we have a dimensionless, scaleless measure of relative dispersion, and two relative standard deviations can be compared to each other as an indicator of the comparative variance of the data in the two sets. So, using the above example, the relative standard deviations would be calculated as $100/$400, or 25%, and $100/$500, or 20%. That tells us that the second data set with a 20% value is less widely dispersed compared to the first one with 25%. Simply put, the fees in a market are clustered more tightly around the average when the relative standard deviation percentage is low. (Note: “CV”, or coefficient of variance, describes the same thing when all of the data in a set is positive numbers, as it is here, so we’ve used the term CV interchangeably.)

Isn’t it illegal “price fixing” to discuss fees?

Not at all. Discussion and dissemination of fees, and collusion to create a cartel, are two different things. Discussing these observed fees and then using them to make planning decisions is no different than grocers observing competitive pricing on bread, or gas stations spot checking the market to see what others are doing.

The fee for my area is wrong. How do you fix it?

We simply report what the data says; it’s neither right nor wrong, but may be different from what a given appraiser charges for a URAR, especially when there are special circumstances attached to the assignment (a large or complex property, long drive times, hypothetical conditions, short turn-around times, and so on). The median and average fees that we report here should be taken as generalized observations of customary fees in a vigorous and diverse market with many variables in play, not as “the fee” for a URAR in a given area.

Aren’t the fees lowered by AMC orders?

We separate the fees into AMC and non-AMC orders based on what we know about the ordering entity, and in this report we analyze only the non-AMC transactions. Many appraisers believe that AMCs and the HVCC have driven down even what independent fee appraisers receive when engaged directly, but this analysis can not address that issue since there is no historical pre-HVCC objective baseline against which to measure any changes.

How does this relate to FHA’s “customary and reasonable” guidelines and HUD’s 2010 GFE rules?

The Appraisal Fee Reference™ provides the only objective data on the market regarding what independent fee appraisers are “customarily” paid for a URAR when engaged directly. It cannot address what is “reasonable” due to the variations of real estate itself. The particular nature of a specific subject property and the associated assignment create conditions which allow only the appraiser to make the determination of reasonableness of the fee. It does however give a lender a defensible basis for estimating closing costs on a GFE for loans using independent fee appraisers. For GFEs where an AMC is used, the fees would generally be higher, so this analysis cannot be reasonably relied upon to estimate closing costs for AMC-managed appraisals. Lenders who order appraisals themselves using our HVCC-compliant Mercury Network receive additional ongoing statistical reports useful in complying with HUD’s new GFE rules.

Who do I contact with questions?

You can e-mail the Mercury Network Analytics team at MercuryAnalytics@alamode.com.